Year Ender| In 2024, Edtech Sought an AI Makeover While Trying to Overcome Byju’s Blow

One of the most buzzing words for the edtech sector in 2024 was AI. Apart from AI, there was Byju’s. Once a darling of investors with a valuation of $22 billion, the edtech company is now valued at zero. The intertwined cases going on against Byju’s with its investors shook the edtech world.  

The disciplinary committee of the Institute of Chartered Accountants of India (ICAI) is reportedly interrogating an auditing lapse in the edtech firm. The Supreme Court also in October this year set aside the National Company Law Tribunal’s (NCLT) order that had halted the insolvency proceedings against the edtech firm.  

This was after a petition was filed by US-based creditor firm Glas Trust Company LLC, which represents lenders of the edtech firm. The lenders are involved in a legal battle with the edtech company for a $1.2 billion loan that Byju's was not able to pay back.

However, edtech cannot be only about Byju’s; add experts. “Every sector has got this issue, right? For example, IT services had the Satyam case. But that industry came up, evolved, and large companies got built. The banking sector has had multiple failures. The airline industry has also faced multiple failures and instances of bad governance, but the industry does not disappear,” said Mayank Kumar, co-founder of upGrad.  

Kumar further highlighted that the sector may have a slightly negative connotation, but the individual companies are seen much more positively in the market today. If we look at the funding in the edtech sector in 2024, it did see an increase to $215 million as of September 2024. This was a slight increase from the $321 million that the sector received in 2023 overall. However, this is way less than the funding boom that emerged in the sector in 2021, where it received funding of $4.1 billion.

Experts indicate that now there is an increase in optimism in this sector. “Confidence in the sector will revive, especially for start-ups that showcase innovation, operational discipline, and an ability to address real-world problems. The appetite for edtech hasn’t diminished and has simply evolved. Investors are now more discerning, prioritizing models that balance vision with pragmatism,” said Ninad Karpe, Founder & Partner, 100x.vc.  

The sector has been seeing some new funding rounds recently. One of the latest is edtech firm Sparkl Edventure by Aakash Chaudhry, which raised $4 million. Some of the major investors who backed the round include Zomato CEO Deepinder Goyal and Zerodha founder Nithin Kamath. Chaudhry is known for his previous venture, Aakash Educational Services Limited (AESL), which was sold to Byju’s in 2021. Edtech firm Eruditus also raised $150 million in October this year.  

The round saw the participation of key investors such as SoftBank Vision Fund 2, Leeds Illuminate, Accel, and TPG Rise. Now coming back to the emergence of Artificial Intelligence (AI), experts suggest that AI will have a transformative impact on education. “AI is set to transform education by enhancing student counseling, enabling personalized learning tailored to individual needs, and simulating real-world scenarios for career readiness. These advancements will streamline customer acquisition, improve teaching, and boost outcome preparation,” added upGrad’s Kumar. Edtech firms have also been trying their hands at AI to catch hold of this trend. For example, in May this year, Khan Academy collaborated with Microsoft to expand access to AI tools that will help personalise teaching in the USA.  

Additionally, edtech firm PhysicsWallah came up with its AI education suite, Alakh AI, in December 2023. Alakh AI, which intends to help students with their coursework, claims to have gained over 1.5 million users. Speaking about the penetration of AI, Prateek Maheshwari, co-founder of PhysicsWallah, said, “Looking ahead, AI is set to redefine personalized learning, tailoring experiences, and driving engagement. Advanced analytics will refine offerings, optimize resources, and amplify impact.” 

Read: Byju’s Faces Legal Setback as Supreme Court Halts Aakash’s Proposed AoA Amendment

Speaking about broader trends in this segment, Kumar said that K-12 education as a segment in edtech has faced significant challenges. “This segment faces challenges due to the lack of measurable outcomes like improved grades or academic performance. The customer (parents) and the consumer (students) being different often leads to aggressive sales tactics. Consequently, scalability has been limited,” said Kumar.  

Some of the prominent start-ups in this segment include Byju’s, Unacademy, and others. This segment also saw a subsequent growth in its funding in 2021, followed by a drop. By August 2024, this segment secured $151 million in funding, marking a 28 percent increase compared to the same period in 2023, according to data from Tracxn. The test preparation segment is another area that is gaining momentum.  

“The test prep space has seen better-defined outcomes, such as whether a student successfully clears JEE or NEET. However, achieving these results often requires offline learning. As a result, there has been a noticeable shift towards offline learning environments in 2024, rather than purely online solutions,” added Kumar. Several edtech start-ups, such as PhysicsWallah and Cuemath, have been expanding their offline presence. To add to it, amid a major skill gap existing in India, upskilling is another area where the private sector has been focusing in.  

The last Union Budget also introduced an internship scheme to bridge the skill gap, targeting 10 million youth in 500 top companies over five years. “A large number of individuals graduating from schools, colleges, and universities lack the necessary skills to directly fit into available jobs. The private sector demands a more skilled or specifically skilled workforce. Many companies are now addressing this gap, which is a major trend in the industry,” said Anil Nagar, founder and CEO of Adda247.

For IT upskilling, the company in September this year acquired placement preparation platform PrepInsta. Nagar said that with the acquisition, the company had a very clear focus that they are going to help students who want to join the IT sector or who want to enter Infosys, Wipro, DCS, and all these kinds of companies. As 2024 ends, it will be interesting to note how the edtech segment shapes up in 2025.